Hedge Funds

washington -- Mitt Romney twice emphasized his unique business background when he and eight other Republican presidential candidates faced off in a debate last week in Iowa. "I've spent the last, as I've told you, 25 years in the private sector," former Massachusetts Gov. Romney declared at one point. "I understand why jobs come and why jobs go. I've done business in 20 countries."

NEW YORK Shortly after Goldman Sachs Group Inc.'s board learned of famed investor Warren Buffett's $5-billion lifeline at the height of the financial crisis, then-director Rajat Gupta phoned hedge-fund manager Raj Rajaratnam. Rajaratnam, a federal prosecutor said Monday, then used that information when he snapped up Goldman stock before the deal was announced in September 2008. Prosecutors said Gupta helped Rajaratnam make $1 million in just six minutes with the help of illegal inside information.

Beverly Hills hedge fund manager Bradley L. Ruderman surrendered to FBI agents Friday after being criminally charged in federal court in Los Angeles with bilking investors out of about $44 million in a wire fraud scheme. Ruderman's surrender came two weeks after a federal judge shut down his hedge funds, Ruderman Capital Partners and Ruderman Capital Partners A, in response to a civil suit filed by the Securities and Exchange Commission.

High price,poor product If you can't buy 'em, beat 'em. That could be the motto for Steven Cohen , the hedge-fund billionaire and runner-up in the bidding for the Dodgers. The San Diego Padres are up for sale, and Cohen is thought to be one of at least five potential buyers cleared by Major League Baseball to review the team's confidential financial data. Cohen already owns a small stake in his hometown New York Mets, but the majority owners of the Mets appear to have staved off the legal and financial distress that might have enabled Cohen to buy them out completely.

An unfolding federal probe of alleged insider trading on Wall Street is escalating, sending a wave of anxiety over the investment industry. FBI agents searched the offices of three hedge fund operators Monday, two of which were started by former executives of SAC Capital Advisors, one of the most profitable and secretive hedge fund managers in the country. One of the firms, Level Global Investors, is partly owned by an arm of Goldman Sachs Group Inc., the most successful and controversial investment bank on Wall Street.

Federal authorities shook the often secretive world of hedge funds with the arrests Friday of the billionaire founder of a major New York operation and five others on charges they engaged in extensive insider trading that allegedly netted more than $20 million in illicit profits. After taking the unusual step of using wiretaps in the investigation, authorities accused Raj Rajaratnam, the founder of the $7-billion hedge fund Galleon Group, two executives at California companies and three others of multiple counts of conspiracy and securities fraud.

The newspaper industry is starting to meet its new bosses — the hedge funds and banks that are moving in as rich family owners and starchy executives move out. Although the objectives of these new owners remain unclear, insiders say the transition period promises more upheaval at newspapers just as they begin to emerge from bankruptcy protection. Over the last year, bankrupt newspaper companies including Tribune Co., owner of the Los Angeles Times, KTLA-TV Channel 5 and other news organizations, have been overrun by a category of stealthy "distressed debt" hedge funds.

Sebastian Mallaby, a veteran journalist who has worked for the Washington Post and the Economist, came out this summer with what has been described as the definitive study of the hedge fund industry with his book "More Money Than God. " Using his access to some of the most secretive and wealthy investors in the world, Mallaby explored the gilded world of these highfliers and explained why many hedge funds seemed to come out of the financial crisis...

Alternative investing these days seems to mean finding an alternative to once red-hot hedge funds. Institutional investors and well-heeled investors yanked a record $152 billion of their cash from hedge funds in the fourth quarter, and $155 billion for all of 2008, marking only the second year with net withdrawals since Hedge Fund Research began tracking the industry in 1990. Total industry assets shrank to $1.4 trillion by year-end, from the mid-2008 peak of $1.

President Obama's harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy this week sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker's debt. Hedge funds and investment managers were irate at Obama's description of them as "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."

You would think a better-than-expected 22% profit jump might convince investors that nutritional-supplement purveyor Herbalife Ltd. is still on a solid global growth track. Not when Greenlight Capital hedge fund manager David Einhorn drops in on the L.A. multilevel-marketing company's conference call with analysts and investors. Einhorn is known for his frequent short-selling bets that stocks are going to decline. All it took Tuesday was his asking what analyst Timothy Ramey called "basic" questions about Herbalife's distribution system for its weight-loss shakes, fitness formulas and energy boosters.

Several high-profile business names, such as San Francisco hedge-fund manager Thomas Steyer and agribusiness magnate Stewart Resnick, have contributed to a proposed ballot measure seeking tighter regulation of health insurance rates, according to campaign finance records. These contributions were among $1.5 million in donations reported Monday to the California Secretary of State by Consumer Watchdog, the Santa Monica group leading the ballot drive. A coalition of insurers, hospitals, doctors and business groups opposing the measure has reported $367,200 in donations.

Barnes & Noble Inc. shares rose sharply after Jana Partners, a hedge fund that has pushed for companies to sell off assets, disclosed a 12% stake in the largest U.S. bookstore chain. The New York-based retailer's shares jumped 18% to $13.41. Barnes & Noble is considering separating its growing Nook digital unit into a separate company so investors will give it the higher valuation of a technology business. In March the company hired a new chief financial officer, Michael Huseby, who helped spin off two units while at Cablevision Systems Corp.

WASHINGTON — Trying to ward off a financial crisis like the one that shook the world in 2008, a powerful panel of federal regulators approved criteria for classifying which non-banking firms pose a risk to the entire financial system and are subject to tougher rules. The new financial regulations are aimed at large, previously unregulated insurance companies, such as bailed-out American International Group Inc., as well as hedge funds, private equity funds and other firms whose complicated securities and bad bets on mortgages created a credit crisis and helped deepen the recession.

Ray Dalio of Bridgewater Associates took home $3.9 billion last year. Fellow investment kings Carl Icahn and James Simons each made off with more than $2 billion. To the average plebeian, that's a lot of money. But for the top 25 hedge fund earners in the U.S., 2011 was the year that they collectively took a 35% pay cut and suffered one of the least profitable periods in their history, according to an annual ranking from investment magazine AR . Blame the European debt crisis , which roiled markets around the world and made timing the markets even more difficult than usual.

The new role that the super-rich play in electoral politics began to emerge with greater clarity Tuesday as recently formed "super PACs" publicly reported their donors and expenses for 2011. Restore Our Future, the super PAC backing Mitt Romney's candidacy, raised $30 million during 2011, thanks in part to separate $1-million donations from three New York-based hedge fund executives: Paul Singer, Robert Mercer and Julian Robertson. Two privately held corporations each gave $1 million to Romney as well.

The hedge-fund firm at the center of the biggest insider-trading scandal to erupt on Wall Street in years is taking steps to close up shop. Galleon Group, founded by billionaire Raj Rajaratnam, who was arrested last week on suspicion of running a widespread insider-trading scheme, told investors and employees in a letter Wednesday that it planned to liquidate its hedge funds. The company also has been approached by outside parties interested in buying it, according to a person familiar with the matter.

Investors put significantly less money into U.S. hedge funds in the third quarter, when credit market woes sparked heavy losses at many prominent portfolios. But demand did not dry up, as some analysts had predicted. Pension funds, endowments and wealthy private investors added a net $45.2 billion to hedge funds in July, August and September, bringing the total assets under management in the loosely regulated industry to $1.8 trillion, data tracker Hedge Fund Research said Tuesday.

Much of Mitt Romney's millions has come from his relationship with the biggest name on Wall Street: Goldman Sachs. In the personal tax returns released by Romney's presidential campaign Monday, Goldman is revealed as one of the central players involved in managing his family's massive wealth. A significant proportion of the Romney family fortune is parked with an elite division of Goldman that is open only to clients with more than $10 million to invest. Another chunk of the fortune is invested in Goldman-run hedge funds, which like all hedge funds are open only to millionaires.

The business of picking one investment over another is great for the person doing the picking, but often less so for whoever hands over the cash. It is rarely the clients of mutual fund companies who own the yachts. Yet the conclusions of "The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True" are still startling, and the author poses a question to the entire hedge fund industry: How can it prosper when customers are treated so badly? For instance, if all the money that has ever been invested in hedge funds had instead been put into U.S. Treasury bills, the results would have been twice as good, according to Simon Lack, author of the book published by Wiley.